Capital Gains Tax Re-introduction in Kenya
The Finance Act of 2014 re-introduced Capital Gains Tax ("CGT") in Kenya. CGT was introduced in Kenya in 1975, but suspended in 1985, in order to inter alia promote the real estate sector and attract investors into Kenya.
Re-introduction of CGT purports to broaden the revenue base as one of the ways of financing Kenya’s rising budget. Further, since CGT is viewed as a tax on wealth, it is a way of increasing the revenue base without imposing more taxes on the poor.
The Finance Act of 2014 amended the Eighth Schedule of the Income Tax Act ("ITA") by providing for tax on gains accruing to a company or an individual on the transfer of property situated in Kenya. The rate of the tax will be 5% which is a final tax. The levying of this tax is expected to begin on January 1, 2015.
Primacy of EAC Customs Laws - Case of Railway Development Levy in Kenya
Business registration Service Bill 2014
The Business Registration Service Bill of 2014, if passed into law, will introduce several changes in registration of corporations and other entities in Kenya. This bill establishes the Business Registration Service ("BRS") as the new body to administer the laws relating to incorporation, registration, operation and management of companies, partnerships and firms; laws relating to individuals and corporations carrying on business under a business name; bankruptcy, societies, hire purchase, chattels transfers, adoption, coat of arms, books and newspapers, the national flag, emblems and names.
Finance Bill 2014 Tax Amendments
On 12th June 2014, the Kenya National Treasury Cabinet Secretary tabled the Finance Bill in parliament proposing various amendments to the tax statutes in Kenya. Parliament debated the Bill in July and August and in September passed the Finance Bill with various amendments. The Finance Bill 2014 was assented to by the President on 14th September 2014, making the Finance Bill an Act of Parliament amending the Income Tax Act, Chapter 470 laws of Kenya of 1989, the Value Added Tax Act, Law No. 35 of 2013, the Customs and Excise Act, Chapter 472 laws of Kenya of 1978 and other miscellaneous statutes relating to taxation. The amendments take effect on different dates from 13th June 2014, on publication of the Finance Act i.e. 19th September 2014, 1st October 2014 and 1st January 2015. Below we provide our analysis relating to the amendments.
Tax Appeals Tribunal Act
The Tax Appeals Tribunal Act (hereinafter referred to as “TATA”) was assented on 27th November 2013. Once enforced through a gazette notice, it will replace by repealing section 32 of the Value Added Tax Act 1989 (Cap 476), section 82 and 83 of the Income Tax Act (Cap 470) and section 127E of the Customs and Excise Act (Cap 472).TATA offers a framework of tax appeals through the tax appeals Tribunal that will be effective and efficient in delivery of decisions. We highlight the key reforms below: